Underquoting is a problem for both buyers and agents, but banning price guides for auction properties is not the solution.

That’s the view of the host of the Lifestyle channel TV show Location Location Location Australia co-host Veronica Morgan.

‘‘I think it’s a problem for everyone,’’ Ms Morgan said.

Veronica Morgan.

‘‘Agents are caught out - when the market suddenly surges they don’t know what a property is going to sell for.

Advertisement

‘‘Often they are caught out as much as the buyer.’’

However, rather than banning price guides for auction properties completely - ‘‘my gut feeling is ... not allowing agents to quote at all, that’s just ridiculous’’ - the solution is simply to simplify and tighten up laws around underquoting.

‘‘I do think it’s a problem,’’ Ms Morgan said.

‘‘An agent has to put something on the agency agreement, I don’t understand why they can’t quote that.’’

Current laws make reference to the agency agreement but don’t specify plainly: The price guide should be exactly the same as what’s on the agency agreement (the document that vendors sign when they list their property with an agent).

‘‘If they quote what is on the agency agreement, that’s more transparent than anything else,’’ Ms Morgan says. ‘‘Agents know how to get around the current quoting system.’’

Ms Morgan, who is also a buyer’s agent, was speaking out as discussion about the Queensland ‘‘solution’’ to underquoting - banning price guides for properties up for auction completely - intensifies.

The Queensland Attorney General, Jarrod Blejie, says underquoting - or ‘‘price-baiting’’ as he calls it - in the southern states is his motivation for introducing the radical new laws.

"The issue of “price baiting” at auctions, which tricks buyers into thinking a home is within their price range, has become a big problem in other states and that’s what the legislation is designed to prevent," Mr Blejie says.

The Sydney buyer’s agent Patrick Bright has put forward another solution to underquoting.

Mr Bright has launched his own online petition calling on the NSW Minister for Fair Trading, Stuart Ayres, to amend the current laws and make it compulsory to publish reserve prices a week before a property goes to auction.

He says the idea could work nationwide.

‘It’s going to make it transparent for everyone,’’ he said.

‘‘The agent’s going be able to say to the buyers, look, we have a reserve, this is the figure, if you’ve got this much money, or more, come to the auction ... it will eliminate underquoting.’’

NSW Fair Trading says it has no evidence that underquoting is a serious problem, though it has announced an upcoming discussion paper on the issue.

It says it is ‘‘sourcing archived records’’ to discover what penalties were given to the eight agents who were found to unable to substantiate the price guide they put on 17 properties in the spring of 2012.

The McGrath Estate Agents chief executive, John McGrath, says up to 15 per cent of agents give homehunters misleading price guides to get buyers through the door.

He says rogue agents should be kicked out of the industry.

But he has condemned the Queensland plan for no price guides, saying buyers need them.

‘If the Queensland Government pushes this through it will be the only legislation in the world of its nature, which I think says something about the legislation,’’ Mr McGrath said.

‘‘This in my eyes is a 50-year-step back to the Dark Ages when agents held all the power.’’